And shortly after the Senate passed the debt deal and sent it on to the
president for his signature, Harry Reid explained how they got to this
compromise. The two sides worked to come up with a bill that neither party
likes.

So, just how bad is this bill for the middle class? We`re going to break
it down for you.

THE ED SHOW starts right now.

(BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Everyone`s going to have to
chip in, that`s only fair.

ROBERTS (voice-over): Democrats want the super-committee to put tax
increases on the table.

Big shocker: Republicans disagree.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: This joint committee will
look at tax reform as well. We hope to get the rates down.

And Republicans are freaking out over something the vice president says he
didn`t say.

SARAH PALIN (R), FORMER ALASKA GOVERNOR: Quite appalling, quite vile.

ROBERTS: We`ll get to the bottom of it all.

One week away from the recall elections in Wisconsin, and polling looks
better than ever for Democrats. John Nichols of "The Nation" is here.

And a Hollywood star caught on tape supporting public education.

MATT DAMON, ACTOR: It`s like saying a teacher is going to get lady when
they have tenure. A teacher wants to teach.

ROBERTS: We`ll show you Matt Damon`s stand on teachers.

(END VIDEOTAPE)

ROBERTS: All right, everybody. So, with the debt ceiling legislation now
passed, Congress rewarded itself today with a vacation until September the
7th. Most lawmakers in the House were already home when the Senate voted
to approve the deal, 74 to 26.

President Obama signed the bill into law early this afternoon. You see no
one`s around them, who`s going to want all those pens. Well, then, he took
to the Rose Garden to lament Washington`s self-inflicted wounds in the wake
of the months-long debt debate.

OBAMA: Our economy didn`t need Washington to come along with a
manufactured crisis to make things worse. That was in our hands. It`s
pretty likely that the uncertainty surrounding the raising of the debt
ceiling for both businesses and consumers has been unsettling, and just one
more impediment to the full recovery that we need. And it was something
that we could have avoided entirely.

(END VIDEO CLIP)

ROBERTS: Wall Street reacted negatively on the heels of this finalized
deal. The Dow Jones Industrial Average dropped more than 100 points. The
S&P 500 closed at a record low for the year.

And credit rater Moody`s announced today the U.S. will keep its AAA credit
rating. The ratings outlook has been deemed negative.

A majority of Americans have a negative outlook on this debt deal as well.
A CNN poll shows 52 percent of Americans oppose the legislation, with 44
percent in favor of it. Seventy-seven percent said politicians acted like
spoil children during the debate, only 17 percent say they acted like
responsible adults.

SEN. HARRY REID (D-NV), MAJORITY LEADER: In the end, the two sides came
together, that`s how our system works. Neither side got what they wanted.
Each side lamented some of the things we had to give up, but that`s the way
it is.

(END VIDEO CLIP)

ROBERTS: But Republican leaders in the House were not convinced that
neither side got what it wanted. This is what Speaker John Boehner told
CBS News yesterday.

The Economic Policy Institute estimates that the spending cuts in the deal
will cost the economy 323,000 jobs next year. While lack of a payroll tax
holiday or unemployment benefit extensions in bill cost an additional 1.5
million jobs.

And the time spent on the debt ceiling debate has cost taxpayers more than
$18 million in lost interest payments.

Joining me now is economist Dean Baker. He`s the co-director for the
Center for Economic Policy and Research.

So, Dean, without the payroll tax holiday, unemployment benefit extensions
in this bill, explain how the economy is going to suffer over the long run.

DEAN BAKER, ECONOMIST: Well, essentially, we`re in a situation where the
economy`s been in a slump or barely growing. We have 9.2 percent
unemployment.

Then we get to the end of this year, the end of 2011 and suddenly people
are paying higher payroll taxes. We go from paying 4.2 percent to 6.2
percent. We also end unemployment benefits, extended benefits, that people
have been getting since the start of the downturn.

And that`s taking a lot of money out of people`s pockets and sort of
straightforward. People are spending much of that money. If they have to
instead, they are getting less, they`re going to spend less, and that`s
less than the economy needs right now. Less demand in the economy means
fewer jobs. It`s going the wrong way.

ROBERTS: Dean, the president continues to talk about tax reform, he did so
today.

Take a listen to this.

(BEGIN VIDEO CLIP)

OBAMA: I`ve said it before. I will say it again. We can`t balance the
budget on the backs of the very people who have bore the biggest brunt of
this recession. We can`t make it tougher for young people to go to college
or ask seniors to pay more for health care or ask scientists to give up on
promising medical research because we couldn`t close a tax shelter for the
most fortunate among us.

ROBERTS: Now, he`s saying that basically is the ink is drying after
signing this bill.

So, does the fact that the president continues this message, talking about
tax reform, indicate that they will insist on it, when these negotiations
come up again? So many people are saying, Dean, that this is more about
the long term war than it was about this one battle.

BAKER: Well, he`s done a lot of insisting that he`s backed down on. I
mean, he`s really painting himself in the very, very bad corner. I mean,
what he should be saying front and center is we don`t have a debt crisis.
We have an economic crisis created by the collapse of the housing bubble.

And he actually misrepresented the situation in speech to the country last
Monday. He said that the deficit projected for when he came into office
was over a trillion, then we got the recession.

No, he and his advisers know it was about $200 billion. In order words, it
was not a large deficit until we got the recession.

The whole story here is the recession, and he should be telling the
American people that. It`s not government out of control. It`s the
recession caused by the collapse of the housing bubble. It`s that simple.

ROBERTS: Well, here are people are talking about now, about potentially of
a double dip recession. Because of this, stocks downed sharply today.
There`s another jobs forecast that`s going to be coming out for this week.

So, in your estimation, what can the government do to push these numbers in
the right direction, if their hands are tied by the cuts that have come
down on this debt ceiling bill?

BAKER: Well, you have to keep looking for every possible venue, one of the
things -- you know, the Fed has ammunition, and principle -- we prodded the
right was very effective in preventing from Bernanke from doing anything.
Progressives should be pushing him, lean on him, push him, getting the
dollar down. That will create exports. That`s creates jobs.

One other thing, Germany`s had great success with work sharing. If we
can`t create more jobs, how about dividing the jobs we have. In Germany,
the unemployment rate today is lower than the start of the downturn. And
that`s even though they have more growth than we have.

ROBERTS: Both sides, Dean, says the phrase jobs killer in reference to how
this conversation went. What the Democrats saying if we don`t have
revenues, this is a jobs killer. With the rights saying that if there are
tax revenues, that`s a job`s killer.

So, who`s going to come out being the proven winner on this because job
growth in the near future is going to be relying on the private sector?

BAKER: Well, in terms of the way of the political battle, I mean, it looks
like the Republicans are winning at the moment. I mean, they can`t change
the reality, though.

You know, most of us are old enough to remember the Clinton years. We had
higher tax rates. We`re creating 3 million jobs a year. The taxes were
not killing them.

If you go back a little further. Those of us who are old enough to
remember the `60s -- we had a great economy, 3 percent unemployment, rapid
growth and we had much higher tax rates. So, you know, if you have a high
tax rate, that can be a drag on the economy. But the reality is, we`ve had
really good growth, very good job creation, with much higher tax rates that
anyone is talking about today.

ROBERTS: Dean Baker -- Dean, great to see you. Thanks for your time
tonight.

BAKER: Thanks for having me on.

ROBERTS: I want to bring in, Democratic Congressman Emanuel Cleaver of
Missouri. He`s the chairman of the Congressional Black Caucus.

Sir, there are more than 14 million out of work right now. I think that
the national average is just above 9 percent for African-Americans, as we
break it down there. It`s above 16 percent. Millions more unemployed and
there are seven stalled jobs bills in Congress currently.

So, how is either party going to create the jobs in this climate that both
sides continue to talk about?

REP. EMANUEL CLEAVER (D), MISSOURI: Well, first of all, I think it`s
important for us to understand that there is only one particular piece of
legislation that Democrats and Republicans agree on, that could create
jobs, and that`s a transportation bill, an infrastructure bill. Everyone
agrees on it.

And the problem is the fury inside the beltway is that it`s such a high
level, it`s almost impossible to sit down and discuss something like the
need for a highway bill. We just laid off, unfortunately, furloughed is a
better word, over 4,000 employees because there`s an attempt to kill unions
in the aviation industry.

And so, you know, it`s difficult for us to have any kind of sustained
effort to reduce the high level, the intolerably high level of
unemployment, because Washington has turned into a mean-spirited town, and
I don`t think it`s going to be an easy job to get us going in the right
direction.

Also keep in mind, when you talk about reducing government spending, you`re
also talking about eliminating jobs. Real human beings, real Americans
will lose jobs. The Congressional Black Caucus, for example, we`re going
on a six-city tour and with major corporations, over 100 major
corporations. We`re going to guarantee over 10,000 jobs. That`s a drop in
the bucket.

ROBERTS: Right.

CLEAVER: The government has a role.

ROBERTS: Sir, ironically, though, you know, people from the House left for
a month-long vacation today, taking off for airports, and you bring up the
fact that the FAA has furloughed over 4,000 employees. They left without
bringing any type of closure to that important amendment or to the budget.

And basically since 2007, they`ve gotten I think 20 different types of
pushes in terms of having a budget, but never really coming to a clear
consensus on the type of money that they should have. But everybody left
today anyway, taking a month off.

CLEAVER: August has been the month we recess probably for the last 100
years. But the reason that the leadership felt like we could go home in
the House at least is because that legislation can`t even get out of the
committee. And if it gets -- if they bring it to the floor, you know, with
something that is acceptable in the Senate, then there`s a call for us to
come back.

But right now the bill that came out of committee came to the floor, was
approved in the House, with Democratic opposition, went to the Senate and
they did the appropriate thing. They said, you mean, we have to destroy
unions in order to maintain the aviation industry of the United States?

And the Senate said, we`re not going to do it, and the president has
already announced he would veto any effort to bring some s such legislation
to his death.

ROBERTS: Senate Minority Leader Mitch McConnell has made it clear that no
future president or Congress is going to be able to avoid a replay of the
debate we saw with this debt ceiling crisis.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: In the future, any
president, this one or another one, when they request us to raise the debt
ceiling, it will not be clean anymore. This is just the first step. We
anticipate it will take us into 2013, whoever the new president is, it`s
probably going to be asking us to raise the debt ceiling again. Then we`ll
go through this process again, and see what we can continue to achieve in
connection with these debt ceiling requests of presidents to get our
financial house in order.

(END VIDEO CLIP)

ROBERTS: Sir, how do you react to that? Is this the new blueprint for the
future?

CLEAVER: This is so sad for the American public. It should have people
cringing all across this country. We`ve had a debt ceiling since 1917 and
we`ve never connected it with anything.

All of a sudden, this year, we have this immaculate connection. We connect
the deficit reduction to the debt ceiling. And if we have to do this each
time we raise the debt ceiling, it`s going to create such chaos in this
country.

We`re the only industrialized nation in the planet with the debt ceiling
because other nations realized that if you did, the politicians would
engage in histrionics to the point that they would be willing to shut down
government. And so, I think it`s unfortunate, because the next president
is going to face the same thing, and then if a Republican president should
come to office, unfortunately, the Democrats are going to say, well, you
know, turnaround is fair play.

And that`s how the tit for tat things become a part of the environment here
in Washington, D.C. And it hurts the American public.

ROBERTS: Well, the super-committee we`ve been talking about is going to
have to decide on major reforms by Thanksgiving and then deliver a plan to
Congress by December 23rd, liberals want Congress to stop acting like a
bunch of turkeys. We`re going to talk about that next.

And we`re just one week away from the Wisconsin recall elections. Ed is
going to be in Madison. Will you?

Stay tuned for those details. You`re watching THE ED SHOW, right here on
MSNBC.

(COMMERCIAL BREAK)

ROBERTS: Members of Congress are flying back to their home districts for a
five-week long vacation before they took the time to save 4,000 FAA
employees who have been furloughed. Another story of exactly how screwed
up Washington is ahead.

You are watching THE ED SHOW.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BOEHNER: Look at how this bill was written. Can you say it was done
openly?

ROBERTS: All right. That was John Boehner talking about the health care
law back in 2010. Now, Speaker Boehner is saying hell, yes to a 12-member
super-committee, who is going to make a backroom deal behind closed doors,
heading from the public tasked with cutting 1.5 trillion dollars from the
deficit. Boehner and Senate minority leader Mitch McConnell will pick six
members of the super-committee. Nancy Pelosi and Harry Reid will pick the
other six.

Only seven members of the 12-member committee will have to agree on a deal.
And that means Republicans only need one Democrat to come over to the
right.

The same can be said for the other side. The super-committee has to
deliver the plan to Congress by Thanksgiving. And Congress has to vote on
the recommendations by Friday December 23rd. If not President Obama and
the Democrats expect the committee to recommend a tax increase in return
for any cuts in entitlements. Here`s where the problem comes in for the
Democrats.

Take a look at what Senator McConnell said yesterday.

(BEGIN VIDEO CLIP)

MCCONNELL: The chances of any kind of tax increase passing, with these
appointees that John Boehner and I are going to put on there, are pretty
low.

(END VIDEO CLIP)

ROBERTS: All right. There you have it. McConnell obviously no interest
in raising taxes, but he does think the super-committee might lower taxes.

(BEGIN VIDEO CLIP)

MCCONNELL: It`s anticipated that the joint committee will look at both
entitlement reform and tax reform. Everybody, you talked about it, I
talked about it. The president has talked about it. Our corporate tax
rate, particularly, is way too high.

So, this joint committee will look at tax reform as well. We hope to get
the rates down for both individuals and corporations. Take a lot of the
preferences out of the code, flatten it out. It has the opportunity to do
that, as well as the entitlement reform.

(END VIDEO CLIP)

ROBERTS: Base Democrats are very worried their leaders will buckle to
political hostage taking of the Republicans, just like they did on the debt
ceiling earlier today.

And joining me now is Margie Omero, president of Momentum Analysis and a
Democratic pollster.

Margie, why do you believe this super-committee could be so dangerous?

MARGIE OMERO, MOMENTUM ANALYSIS: Well, I think -- I understand why people
are frustrated with how this process went and how Democrats in particular
are frustrated with how the Tea Party seemed to take this process hostage.
But I think it would be a mistake to look at this and say Republicans
haven`t paid any political costs and that`s going to translate to something
even worse down the road. Because remember that Republicans now, all these
members are going home to their districts, they`re going to be listening to
the voters who they expect to say thanks for not raising my boss`s --
closing my boss`s tax loopholes. But, really, they`re going to be saying,
what were you thinking?

I mean, all the polls that I`ve seen from the last week have shown that
voters really feel that Obama did a better job and Democrats in Congress
did a better job than Republicans. Republicans have paid a far larger cost
in public opinion. And they`re going to feel that when they go home, and
there`s going to be incentive for them to not stack the committee or to
look at it in a way that`s not balanced, that`s not a reasonable debate.

So, you think Republicans may come back to Washington after this recess and
be a touch reformed? To the point where they could capitulate on taxing
the rich?

OMERO: Well, I think that -- well, it`s not so much taxing the rich, I
think it`s important to remind people this isn`t about raising the tax rate
for everybody. It`s really just closing some loopholes.

But I think the way this is set up, the way the committee is set up, is
that it will be balanced, it will be, you know, six and six from each side.
And whatever they come up with is going to go to an up or down vote. So,
it`s not going to be subject to amendments and the filibuster process we`ve
seen, kind of add to the complexity and the political wrangling that goes
on. So, you don`t have that element there.

And, you know, remember that there have been some proposal, whether it`s
the "gang of six" or even Boehner himself, that have gotten some revenue
increases that gone some Republican support. So, it`s not as if every
single Republican in both chambers is opposed to anything resembling
revenue increase, because that`s not true.

And then worst case scenario, you know, insist on having this very
political attitude that voters have really rejected, clearly. You know,
there`s another option. There are other options.

This last debate, there were a few other options in the current -- as to
the committee, the president could, you know -- you know, the trigger goes
off, and then everybody has to suffer. There`s no committee agreement,
then you end up seeing, you know, more military cuts.

And we already had a variety of military cuts. I don`t think the
Republicans are going to want to see that happen. Plus, you have the Bush
tax cuts expiring. So, there are some other options.

ROBERTS: Right. Margie Omero of Momentum Analysis Margie -- great to see
you tonight. Thank you.

OMERO: Thank you.

ROBERTS: So, if you think Democrats caved in for the debt ceiling fight,
you won`t believe what they may be caving in on next.

And did the vice president called Tea Party Republicans terrorists? His
office says no. But that doesn`t stop Michele Bachmann from fundraising
off of it.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: While we`re on the topic of infrastructure, there`s another
stalemate in Congress right now involving our aviation industry, which has
stalled airport construction projects all around the country. And put the
jobs of tens of thousands of construction workers and others at risk
because of politics. It`s another Washington inflicted wound on America,
and Congress needs to break that impasse now, hopefully, before the Senate
adjourns, so these folks can get back to work.

ROBERTS: President Obama is referring there to the 12-day furlough of some
4,000 FAA employees because Congress -- wait for it -- can`t agree on an
extension of a short-term funding bill. The delay has also put a halt to
aviation projects all across the country that employed almost 80,000
construction workers during the busy construction season.

Like the multiple times Congress passed a debt ceiling extension before.
Congress has also passed 20 short term measures to keep the FAA running
since 2007.

Now, here`s the politically manufactured crisis. Republicans self-
admittedly sneaked an anti-union poison pill into this extension. The new
law says that any non-vote on a union election, what you call a no vote.
The Democrats wanted a clean bill. And House Minority Whip Steny Hoyer,
well, he blasted Republicans today.

(BEGIN VIDEO CLIP)

REP. STENY HOYER (D-MD), MINORITY WHIP: They were prepared to walk away
from here and leave almost 95,000 people without a job. Why? Because they
passed a bill and said to the United States Senate, either you take it our
way or there will be no runway and no highway and no way. That is a
perfect example of the politics not of persuasion, not of compromise of
coming together, but the politics of confrontation.

(END VIDEO CLIP)

ROBERTS: House Democrats have fought the good fight for unions, but Harry
Reid opened the door for more capitulation in the face of confrontation.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: We learned with this big deal
we`d just done. Sometimes, you have to step back and find out what`s right
for this country and not be bound by some your own personal issues.

(END VIDEO CLIP)

ROBERTS: Even President Obama`s transportation secretary is giving in to
the job killing anti-union provision, after calling for a clean bill
earlier this week. And today, during a conference call, Transportation
Secretary Ray LaHood said, quote, "We need the Senate to pass the House
bill before they go on their vacations to put 4,000 people back to work,
and 70,000 construction workers."

At this hour, though, Senate Democrats and the president have not caved to
the Republican confrontation, and we will bring you up-to-date as soon as
they do.

Well, the Koch brothers bankroll a block the vote effort in Wisconsin.
John Nichols weighs in and I`m going to talk to one of Wisconsin`s bravest
firefighter. Malan Mitchell will join me.

And President Obama met with labor leaders today and vowed to renew his
focus on jobs. But after a bruising battle just to raise the debt ceiling,
can this Congress ever reach an agreement on a real jobs bill.

(COMMERCIAL BREAK)

ROBERTS: So we are one week away from election day in Wisconsin and the
right wing is doing a lot, all that it can to block the vote. As we
reported last night, the Koch Brothers funded Astroturf group Americans for
Prosperity is sending absentee ballots to reliably Democratic voters in at
least two districts.

Now, the ballot instructs voters to fill out the form and return it by
August 11th. But the elections are on August the 9th. Now that group
claims the error is just at typo. Democrats need to hold on to their two
seats and win three of the six Republican seats to win back the state
senate.

And the State Democratic party chair thinks they`re in position to do this.
As Greg Sargent reports, party chair Mike Tate told reporters that every
race is imminently winnable. "Our polling tells that we have leads in
three of these races, and we are dead tied in three."

A reminder that Ed is going to be broadcasting live from Madison next week.
He`s going to be outside the capitol building on the corner of East
Washington and Pinkney, August 8th and August the 9th.

Joining me now from Madison is the Washington correspondent for "The Nation
Magazine," John Nichols. Also joining me is the president of the
Professional Fire Fighters of Wisconsin, Mahlon Mitchell.

Welcome to both of you. John, I want to start with you, though, because
what we`re talking about from the Koch Brothers -- it`s a Koch funded group
that`s using voter suppression tactics. Easily said enough.

Weren`t the Koch Brothers integral to Governor Scott Walker`s election in
the first place?

JOHN NICHOLS, "THE NATION": They absolutely integral to his election. The
Koch Brothers and their allies were the core contributors to the governor`s
campaign. The Koch brothers gave the largest individual contributions to
the campaign.

But much more significantly than that, they poured money into the
Republican Governor`s Association, which did extensive spending in
Wisconsin on Scott Walker`s behalf, some of the most aggressive negative
advertising in the state.

Additionally, of course, we know the famous crank call to Governor Walker
when he thought one of the Koch brothers was calling. And in the midst of
the whole Wisconsin controversy, back in February, he spent 20 minutes
talking to someone he thought was one of the Koch brothers.

So clearly he`s got an interest in and a connection to these fellows.

ROBERTS: Mahlon, as I was saying before, in the intro here, party chair
Mike Tate is telling reporters that every race is imminently winnable. Are
you that optimistic about that?

MAHLON MITCHELL, PROFESSIONAL FIRE FIGHTERS OF WISCONSIN: I am that
optimistic, because there`s a lot of things going on in our state right
now, just like what John talked about. I have one of the absentee ballots
from the Koch Brothers, Americans for Prosperity, that says August 11th --
send in your absentee ballot by August 11th.

We all know, if you`ve been following Wisconsin, August 9th is the
election. So this is obviously cockamamie propaganda.

But I want to talk about yesterday, if you give me a minute. Yesterday,
our Senate GOP decided to flip-flop, so to speak, on unemployment benefits
to our state, extending the 13 weeks of unemployment benefits. They once
said that it would be OK to not have that one week waiver, that one week
wake just to get a 360 dollar benefit a week.

But it went to the Assembly. The assembly Republicans shot that down,
said, no, we want that one week waiver to save more money for the state.
Forget the middle class.

And it actually passed in the middle class -- in the Senate. So this is
not just about unions. This is not just about collective bargaining. This
is about an attack on 40,000 Wisconsinites that will not see unemployment
benefits for one week, just to save a couple dollars for our state.

ROBERTS: John, let`s talk more about that, because you report that under
Scott Walker, unemployment is increasing in Wisconsin at twice the rate it
is nationally. So explain to all of us, what are the six Republican
senators running on?

NICHOLS: Well, it`s a very interesting thing. They`re not running on
their association with Scott Walker. I just did the better part of a 600
mile trip around the state. I was in most of the districts. I looked at
the literature. I looked at the ads. I listened to the radio commercials.

And you saw no mention in the Republican campaigning of Scott Walker. What
they are claiming, of course, is that they really are much more liberal
than you thought, they really are in favor of public education, in favor of
public services.

It`s a bit of a smoke and mirrors campaign, attempting to fuzz the issues.
The thing I saw, Thomas, as I went around the state was everywhere I was,
people are very conscious that this is a referendum on Scott Walker`s
policies and on the people who chose to align with Scott Walker rather than
Mahlon Mitchell and the public employees and teachers of the state.

ROBERTS: They`re paying attention. Mahlon, explain to us if the Democrats
take back the state senate. Specifically, what does it mean to you and
your fellow firefighters.

MITCHELL: Well, it means we`re going to have a stopgap, a firewall, so to
speak, that stops just the rubber stamping of legislation that kills the
very premise of what Wisconsin is all about. That`s middle class workers.
So what we have is a checks and balances, so to speak, so we just don`t
have a governor that`s telling us everything we need to do and shoving down
our throats.

We actually have some debate about it. It`s not going to happen all in six
months. We`re going to be able to actually sit down and have a voice at
the table or a seat at the table and be able to talk about different things
happening in our state.

ROBERTS: As we`ve been saying, it`s a week from today, coming up on August
9th. Do you see what`s going to take place there, these elections as a
dress rehearsal for 2012?

NICHOLS: Absolutely, I do. Thomas, you cannot imagine -- and I know
you`re an experienced news man. But you cannot imagine the amount of money
that`s flowing into this state. It`s literally tens of millions of
dollars. Television is filled with advertising. Mailboxes are filled with
mailings.

And you`re seeing a lot of intensive campaigning by these new independent
groups that have been empowered by the Supreme Court Citizens United
rulings. There`s no question that they`re test marketing and testing their
strategies and style of campaigning for 2012.

If progressive forces and grassroots activists beat them back, I think
that`s going to send a powerful message. By the same token if all these
outside groups with their huge amounts of money from the folks like the
Koch Brothers prevail, that`s going to be a terribly bad signal not just
for Wisconsin but the country.

ROBERTS: We`re sending our big guns. We`re sending Ed to you on the 8th.
You`re going to have him the 8th and the 9th.

So John Nichols, Mahlon Mitchell, thanks so much, gentlemen. Appreciate
your time tonight.

Democrat leaders in Congress challenged Republicans to focus on jobs for
the first time since John Boehner took the Speaker`s gavel. But will our
divided government be able to bridge their differences for the good of the
American people? Mayor Virg Bernero of Lansing, Michigan joins me next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It shouldn`t take the risk
of default, the risk of economic catastrophe to get folks in this town to
work together and do their jobs. Because there`s already a quiet crisis
going on in the lives of a lot of families, in a lot of communities all
across the country.

They`re looking for work. And they have been for a while. Or they`re
making do with fewer hours or fewer customers. We have to do everything in
our power to grow this economy and put America back to work. That`s what I
intend to do, and I`m looking forward to working with Congress to make it
happen.

(END VIDEO CLIP)

ROBERTS: Now that the debt ceiling drama is over, Democrats are vowing to
privatize jobs. And President Obama met privately with leaders of the AFL-
CIO this morning and was expected to get an earful about the debt ceiling
deal, which labor leaders say will working Americans.

Meanwhile, Democratic leaders in Congress echoed the president`s call for a
renewed focus on jobs.

(BEGIN VIDEO CLIP)

SEN. HARRY REID, MAJORITY LEADER: Today we made sure that America will pay
its bills. Now it`s time to make sure that all Americans can pay theirs.

ROBERTS: Yeah, where are the jobs. For more, let me bring in Virg
Bernero, the mayor of Lansing, Michigan. Mayor, it`s nice to have you on
tonight. We just saw and lived through how hard it was to get what used to
be a simple debt ceiling hike through Congress.

In your opinion, how are they ever going to get VP anything going on jobs
in this country if they can`t make something clean out of what used to be
something so simple?

MAY. VIRG BERNERO (D), LANSING, MI: With all due respect to those folks, I
mean, we hear the words. We hear words. Here on Main Street, we need
action. You said it. We need those jobs. And we`re working like the
Dickens to make it happen.

But we are hurting. The president was right. We`re hurting out here in
middle America, in places like Lansing, Michigan and all over this country.
Our infrastructure is crumbling, roads, sewers, schools, you name it.
Things that people don`t think about like the sewers, they need to be
maintained. They`re falling apart.

We need help. We`re doing everything we can. Our tax base is shrinking.
Home values are declining. Nothing`s been done about the mortgage
foreclosure crisis.

Let`s not forget, we have thousands, millions losing their homes, being put
out. And our shelters and our soup kitchens are busting at the seams.

Then we get this debt ceiling package that is basically like pouring water
on a drowning man. Yes, I hope they can get to the jobs, but will they
have the resources to do the job.

Any local mayor knows -- anybody who balances a budget knows you have to
look at both revenue and expenses. And they ignored the two sides. They
only did one side of the coin. They focused on the spending, but did
nothing about the revenue.

The tax cuts for the filthy rich continue. When you give away you`re tax
base, when you give away to the corporations the tax giveaways that
continue, and you do nothing to add to the revenue, what money will they
have to help stimulate the economy? How will they help us to invest in
education and invest in infrastructure, the things that are the very basic
elements of economic development?

ROBERTS: Mayor, take a listen to this, because this is what House Minority
Whip Steny Hoyer said as he laid out the key elements of the Democrats`
jobs plan today.

ROBERTS: So Hoyer mentioned manufacturing, but data came out yesterday,
mayor, showing that this July manufacturing sector had its slowest growth
in two years. What do you think Washington needs to do to turn that
around, and take into account the fact that there`s this growing disparity
in the country that`s putting the middle class to the lower class?

BERNERO: Let me tell you something, I know something about manufacturing.
Lansing is one of the leading manufacturing cities. We are growing
manufacturing. We`re grateful to have General Motors and a lot of other
businesses investing and growing. We make things here in Lansing. And
we`re proud of that.

Washington for too long has been focused on trade agreements that outsource
jobs and ship out our manufacturing jobs. So they can start with fair
trade, not free trade, but fair trade agreements. And we can tax companies
who chose to invest overseas, instead of rewarding them and incentivizing
them to take our jobs overseas.

NAFTA has cost us millions of jobs. So they better put a halt on any
future trade agreement, and focus on bringing jobs here and growing the
manufacturing sector. Look at other countries like Germany, who invest in
vocational education. Our voc. ed, too many of them are falling by the
wayside. They`re antiquated.

We need new investments. We need new equipment. We have to stop this
notion that every child has to go to college to be successful. We need
skilled trades. We need to invest in the skilled trades.

So there`s lots of things that can be done. We need to help mom-and-pop
businesses as well, who have tool and die. Some of these businesses are
falling by the wayside. There`s plenty of things we can do.

ROBERTS: Virg Bernero, mayor of Lansing, Michigan, sir, great to see you,
thanks for your time tonight.

BERNERO: Nice to be with you, Thomas.

ROBERTS: The vice president says he did not compare Tea Party Republicans
to terrorists. But Sarah Palin still thinks he did. The right wing`s
manufactured outrage straight ahead.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MATT DAMON, ACTOR: This has been a horrible decade for teachers. And I
can`t imagine how demoralized you guys must feel.

Please, please, please know that there are millions of us behind you. You
have an army of regular people standing right behind you. And our
appreciation for what you do is so deeply felt. We love you. We thank
you. And we will always have your back.

(END VIDEO CLIP)

ROBERTS: Looking pretty good with that summer cut there. That was "Borne
Identity" star Matt Damon at this weekend`s Save Our School`s March on
Washington, D.C.. Thousands of teachers and supporters of public education
rallied in the nation`s capital to call attention to the problems facing
America`s public education system.

Damon was not the only big name appearing at this event. "The Daily
Show`s" Jon Stewart sent a taped address to that crowd. He said he would
have been there in person, but his dog ate his car. That was his joke, not
mine.

But Damon, who was introduced on stage by his mom who is a teacher was the
real headliner. He drew thunderous applause for his defense of teachers
from politicians and reformers who think they know more about education
than educators themselves.

Then backstage a reporter from a libertarian magazine asked Damon why
teachers should get tenure if actors don`t? The Academy Award winner
schooled the reporter.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: In acting, there isn`t job security, right? There`s
an incentive to work hard and be a better actor, because you want to have a
job. Why isn`t it like that for teachers?

DAMON: You think job insecurity is what makes me work hard?

UNIDENTIFIED FEMALE: Well, you have an incentive to work hard.

DAMON: I want to be an actor. That`s not an incentive. That`s the thing.
You see, you take this MBA style thinking, right. It`s the problem with ed
policy right now, is this intrinsically paternalistic view of problems that
are much more complex than that.

It`s like saying a teacher is going to get lazy when they have tenure. A
teacher wants to teach. Why else would you take a (EXPLETIVE DELETED)
salary and really long hours and do that job unless you really love to do
it?

SARAH PALIN, FOX NEWS CONTRIBUTOR: Heck, Sean, if we were real domestic
terrorists, shoot, President Obama would be wanting to pal around with us,
wouldn`t he? He didn`t have a problem palling around with Bill Ayers back
in the day.

(END VIDEO CLIP)

ROBERTS: That was half term Governor Sarah Palin earlier this evening.
We`ll get to her in a minute. But first, they`d just been handed a sugar
coated Satan sandwich. And so House Democrats met with Vice President Joe
Biden yesterday to express their frustrations over the debt ceiling deal
before they were expected to close their eyes and then take a bite of that
sandwich.

It was a two-hour closed door meeting. No video, no audio recordings, just
a few unnamed sources telling "Politico" what was said behind those closed
doors. So when the conversation turned to the Tea Party`s role in the
matter itself, Congressman Mike Doyle of Pennsylvania reportedly told the
vice president, "we have negotiated with terrorists. This small group of
terrorists have made it impossible to spend any money."

"Politico" reports that Biden responded, "they have acted like terrorists."
Now, Vice President Biden denies using the word. His office issuing a
statement that the vice does not believe it`s an appropriate term in
political discourse. But that has not stopped the right from being
predictably outraged over what may or may not have happened.

Republican presidential hopeful and Tea Party favorite Michele Bachmann is
so outraged, she`s fund-raising off of it. Bachman, who`s accused
President Obama of ushering socialism and running a gangster government,
claims the non-remarks went too far. Saying, "I`m offended by Vice
President Biden`s irresponsible words and need your support to defend
myself and fellow Tea Party members right away."

It`s time to call in senior contributing writer at "The Daily Beast" and
author of "Kingdom Coming, the Rise of Christian Nationalism," Michelle
Goldberg. Welcome, Michelle, good to have you on tonight.

MICHELLE GOLDBERG, AUTHOR, KINGDOM COMING: Thank you.

ROBERTS: When we talk about this former Bush Treasury Secretary Paul
O`Neill recently said, "the people who were threatening not to pass the
debt ceiling are our version of al Qaeda terrorists. Really they`re really
putting our whole society at risk." This is an exact quote.

So were Michele Bachmann`s fund-raising e-mails sent out for that one as
well?

GOLDBERG: I think, in general, if you`re really sensitive about terrorist
analogies, then it`s probably a good idea not to threaten to torpedo the
global economy unless your faction`s political demands are met. Given that
this has --- you know, the hostage taking metaphor has been used over and
over again throughout this process because it`s so very, very apt.

Of course, nobody really blinks. People know that they -- you use this
kind of language all the time when you`re talking about politics. You use
metaphors of war and battle and fight. That was public. This was a behind
closed door meeting where something may or may not have been said.

But, you know, the right especially -- there`s a whole Washington kind of
tiresome tradition of faux outrage. But the right especially thrives on
victimization.

ROBERTS: Republicans have compared themselves to terrorists. In 2009,
Congressman Pete Sessions said that the Taliban could serve as a model for
how republicans can become an insurgency. After those alleged remarks,
more offensive than what Mr. Sessions said about his fellow Republicans --
as we heard Sarah Palin, she is bringing back her phrasing of talking about
President Obama palling around with terrorists, the accusation she made
just before tonight on Fox News.

Is the dawn of this rhetoric coming back and in full force?

GOLDBERG: I don`t know that it ever really went away. There might have
been a couple of moments after Gabrielle Giffords was shot where people
thought that they were going to tone it down. But the idea that the
Republican party is so unbelievably outraged by political indelicacy, given
the unprecedented language that they use to talk about not just Obama, but
relatively obscure aids like Van Jones -- there`s been a fairly --

Like I said, there`s a tradition of faux outrage on both sides. But given
the fairly unprecedented demonization campaign that`s been waged against
the entire Obama administration, there`s something really rich, but also
not really unexpected that they would be kind of milking this possible off
the record, behind closed doors comment for all its worth.

ROBERTS: Do you think that now it`s time for just Americans to show the
outrage. Let the politicians sew their mouths shut for a little while and
Americans show the outrage for what`s really going on in Washington?

GOLDBERG: What`s unfortunate is that so far -- it seems that there is
outrage out there, but it really isn`t getting -- it really isn`t getting
anybody`s attention. By far, the smallest injustice here was that somebody
might have said a bad thing about the Tea Party.

This is THE ED SHOW for tonight. Stay tuned. Lawrence O`Donnell is next.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY
BE UPDATED.
END

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